Antitrust: Commission prohibits practices
which prevent European collecting societies offering choice to music authors and
users

The European Commission has adopted an antitrust
decision prohibiting 24 European collecting societies from restricting
competition by limiting their ability to offer their services to authors and
commercial users outside their domestic territory. However, the decision allows
collecting societies to maintain their current system of bi-lateral agreements
and to keep their right to set levels of royalty payments due within their
domestic territory. The prohibited practices consist of clauses in the
reciprocal representation agreements concluded by members of CISAC (the
"International Confederation of Societies of Authors and Composers") as well as
other concerted practices between those collecting societies. The practices
infringe rules on restrictive business practices (Article 81 of the EC Treaty
and Article 53 of the EEA Agreement). The Commission decision requires the
collecting societies to end these infringements by modifying their agreements
and practices, but does not impose fines. The removal of these restrictions will
allow authors to choose which collecting society manages their copyright (e.g.
on the basis of quality of service, efficiency of collection and level of
management fees deducted). It will also make it easier for users to obtain
licences for broadcasting music over the internet, by cable and by satellite in
several countries from a single collection society of their choice.

Competition Commissioner Neelie Kroes said: "This decision will benefit
cultural diversity by encouraging collecting societies to offer composers and
lyricists a better deal in terms of collecting the money to which they are
entitled. It will also facilitate the development of satellite, cable and
internet broadcasting, giving listeners more choice and giving authors more
potential revenue. However, the Commission has been careful to ensure that the
benefits of the collective rights management system are not put into question in
terms of levels of royalties for authors and available music repertoire."

Music authors (lyricists and composers) sign over to collecting societies the
rights to manage on their behalf, worldwide, the copyright of their musical
works. Based on the CISAC model contract, collecting societies have concluded
reciprocal representation agreements for the collective management of the public
performance rights of their musical works so that they can each offer the
repertoire of all the artists represented by all the collecting societies
participating in the representation agreements. The public performance rights
enable authors of musical works to authorise or prohibit the exploitation of
their works by commercial users such as TV channels and radio stations, and to
receive royalties every time their music is played.

The Commission opened an investigation following complaints from broadcasting
group RTL and Music Choice, a UK online music provider.

The Commission's decision recognises the valuable role of collecting
societies and does not challenge the existence of the reciprocal
representation agreements. It does, however, prohibit certain aspects of those
agreements as well as concerted practices among collecting societies.

In particular the decision requires the 24 EEA-based collecting societies
which are members of CISAC to no longer apply:

the membership clause, currently applied by 23 collecting societies,
thatprevents an author from choosing or moving to another collecting
society.

territorial restrictions that prevent a collecting society from
offering licences to commercial users outside their domestic territory. These
territorial restrictions include an exclusivity clause, currently
contained in the contracts of 17 EEA collecting societies, by which a collecting
society authorises another collecting society to administer its repertoire on a
given territory on an exclusive basis and a concerted practice among all
collecting societies resulting in a strict segmentation of the market on a
national basis. The effect for a commercial user such as RTL or Music Choice
that wants to offer a pan-European media service is that it cannot receive a
licence which covers several Member States, but has to negotiate with each
individual national collecting society.

The decision will
allow collecting societies to compete on the quality of their services and on
the level of their administrative costs (which are deducted from the money
collected before it is passed on to the author). It will thus provide incentives
to collecting societies to improve their efficiency.

In 2007 the Commission sought to resolve the case amicably when formal
commitments were offered by CISAC and 18 collecting societies (see IP/07/829).
However, interested parties' comments on the commitments were negative. In
particular, broadcasters, content providers and certain collecting societies
generally considered that the proposed commitments would continue to make it
difficult for a commercial user to obtain a pan-European licence.